International Journal of Management and Enterprise Development (10 papers in press)
Business model research using an evolutionary theory perspective
by David Brannon, Verona Edmond
Abstract: We show how evolutionary theory may be used as an overarching tool to develop a better understanding of the business model concept. The business model concept continues to draw interest. Academics have approached the business model concept as a means to explain value creation and implementation of innovative business ideas. Progress on the concept has been slowed due to disparate views and definitions. This paper illustrates that evolutionary theory provides a comprehensive, well-established theoretical basis to examine the business model concept - especially in terms of innovation and entrepreneurship. This includes theoretically guided origins of innovation based on firm characteristics. Research on the business model concept has been conceptual or case studies. Configuration analysis (based in evolutionary theory) is proposed as a means to empirically examine this complex concept. Evolutionary theory has the potential to bridge the different views of the business model as a holistic concept for implementing innovation.
Keywords: Business Models; Innovation; Entrepreneurship; Evolutionary Theory; Organizational Routines; Configuration Theory
Success Factors for Active Internationalization of Small and Medium-Sized Software Enterprises: Case Analyses from France and Brazil
by Maurício Floriano Galimberti, Raul Sidnei Wazlawick
Abstract: In many countries there is a small but growing tendency towards the internationalization of small and medium-sized software enterprises (SMEs). This paper searches for insights about the internationalization process of SMEs with highly innovative products. It compares the internationalization process in France, as a mainstream country in terms of technology, and Brazil, as a non-mainstream one. This paper attempts to answer the following questions: what are the factors that enable SMEs to offer high value-added products to the foreign market, and what are the differences and similarities between internationalization processes from both countries. Based on a multiple case study, this research shows that although innovation, entrepreneurship, and foreign market knowledge are important dimensions for the active internationalization, networking is not as relevant as it was thought to be. Moreover, the study shows that internationalization consists of two different processes.
Keywords: active internationalization; software innovation; software SMEs
Financial failure of a startup: A simulation approach
by Erkki K. Laitinen
Abstract: The objective is to develop a simulation model of a startup to assess the ceteris paribus effects of (sixteen) different parameters on the likelihood of financial failure. The deterministic growth path is described by a second-order Pascal distribution. Uncertainty is incorporated assuming a random variable proportional to sales. Three criteria for financial failure are developed to assess the likelihood of different failure types (profitability, solidity, and liquidity failures). Finnish data from 9066 non-failed and 118 failed startups are used to approximate the value range of the parameters in non-failed and different types of failed startups. For each parameter, effects are analyzed for 25 different values based on 1000 simulation rounds each. The findings strongly emphasize the central role of internal rate of return in the likelihood of each type of failure. They also emphasize importance of early generation of sales for the likelihood of profitability failure and the strong effect of fixed expenses, size of initial investment, and initial equity capital on failure likelihood.
Keywords: Startup; financial failure; bankruptcy; liquidity crisis; profitability; failure probability; simulation.
The Role of Non-Economic Goals in Facilitating Financial Performance in Family and Non-Family Firms: A Moderated Mediation Model
by Bart Debicki, Robert Van de Graaff Randolph, Robert Zajkowski
Abstract: The relevance of non-economic goals has long been recognized as significant in understanding the idiosyncratic behaviors and strategies of family firms. However, non-economic goals are not unique to family firms and are becoming an increasingly common part of the strategic landscape of organizations. We develop arguments, nested in behavioral and emotional agency, that suggest that non-economic goal salience may play a facilitating role in the relationship between the importance of economic goals and financial performance, and that the presence of shared family ties among the ownership of firms moderates this mediated relationship. Our findings contribute to the current understanding of non-economic goals in terms of their impact on the financial performance of organizations, as well as provide initial arguments for clarifying the presence of such goals as commonly associated with family firms, but not uniquely derived within them.
Keywords: Family firms, non-family firms, performance, financial goals, non-economic goals, behavioral agency, emotional agency
Impact of exploitative learning strategy on Malaysian SMEs' creativity and innovation capabilities
by Naser Valaei, Sajad Rezaei, Maryam Emami
Abstract: Small and medium-sized enterprises (SMEs) can be considered as learning enterprises due to their competitive natures. The aim of the current study is to examine the notion of exploitative learning strategy, which is practiced among Malaysian SMEs in order to determine to which extent it will result in creativity and innovation. A questionnaire was developed and was distributed among 1850 SMEs online from which 206 surveys were thoroughly completed and were returned. A variance based structural equation modelling technique (VB-SEM) was utilized to assess the measurement as well as the structural relationships for exogenous and endogenous constructs. Results of hypothesis testing indicate that the exploitative learning strategy has a significant, positive role in improvisational creativity, compositional creativity, and innovation while its indirect effect on innovation capability is also significant through compositional creativity. This study also finds that the number of employees moderates the relationship between exploitative learning strategy, improvisational creativity, and innovation in SMEs.
Keywords: Exploitative learning strategy, improvisational creativity, compositional creativity, innovation, SMEs, Malaysia
Early Stages of Service Business Review and Synthesis
by Matti Muhos, Martti Saarela, Anna-Mari Simunaniemi, Del Foit Jr., Lada Rasochova
Abstract: Many stage models have been introduced to clarify management priorities during the early stages of business growth. However, many of these models are conceptual and universal, providing only limited benefits to specific industries and business contexts. The early stages of technology-based ventures have attracted interest, while little attention has been paid to the early stages of service-based firms. This study examines the early stages of growth in service-based firms. The following research questions are posed: What are the basic characteristics of recent empirical studies on the early stages of service-based firms? What are the themes and sequential patterns in the early stages of service-based firms as revealed in the recent empirical literature? This study provides a meta-analytical review designed to answer the research questions. A group of recent empirical stage models of the early stages of service-based business was selected for meta-analysis and synthesis. The meta-analysis integrates the findings of these models and introduces a self-evaluation framework for the early stages of service-based companies.
Keywords: enterprise development; growth management; stages of growth; growth process; service-based firm; business development; meta-analysis; review.
Heuristics of the Internationalisation of SMEs: A Grounded Theory Method
by Hossein Khorrami, Mohammad Zarei, Behrouz Zarei
Abstract: Heuristics can be a useful and applicable tool, utilised in simplified strategies for solving ill-structured and highly uncertain problems, such as internationalisation of Small-and Medium-Sized Enterprises (SMEs). International Entrepreneurship (IE) researches suggest that, paying more attention to discovering the valuable individual initiatives used in internationalisation of SMEs. This paper investigates the Iranian internationalised SMEs to provide a set of heuristic principles and guidelines for running a successful internationalisation process. Analyses of the interview data suggest that, heuristics is an instructional tool of internationalisation, which facilitates and subsequently accelerates the process of SMEs internationalisation. The model of internationalisation based on heuristics is extracted from the systematic grounded theory (GT). Originally, GT was applied for increasing the chance of discovering the unanticipated happenings as an inductive theory-discovering methodology. From the research, it can be concluded that by applying the heuristics-based model of internationalisation, SMEs can make significant contributions in IE such as position stability in foreign markets, problem-solving tools in internationalisation process, sales growth, profitability, as well as added value generation.
Keywords: Internationalisation; Heuristic principle; Grounded theory; International entrepreneurship; Small-and Medium-Sized Enterprises (SMEs)
Analysing innovation-driven enterprises stakeholders in two spatial ICT ecosystems
by Jukka Majava, Tuomo Kinnunen, Del Foit, Pekka Kess
Abstract: Innovation-driven enterprises (IDEs) engage with various stakeholders during new product development and commercialisation. Spatial ecosystems in which these enterprises operate provide them with the local business environment for new innovation development. Our study analyses IDEs stakeholders in two spatial information and communication technology (ICT) business ecosystems: one in San Diego, California, USA and the other in Oulu, Finland. The study analyses the stakeholders presence and their roles to support innovation. The critical stakeholders for supporting innovation-driven enterprises, such as providers of different forms of capital and research institutes, are identified. Our findings suggest that IDEs should exploit the spatial ecosystems by interacting with various stakeholders and by gaining access to local resources to create new innovations. The results of the study are beneficial both for managers of new innovation-driven ventures and decision-makers designing and implementing innovation policies.
Keywords: innovation; business ecosystem; stakeholder; innovation-driven enterprise (IDE); spatial context; information and communication technology (ICT)
Special Issue on: Behavioural Issues in Family Enterprises
TIME TO RECALIBRATE? EXPLORING ENTREPRENEURIAL ORIENTATION OF FAMILY BUSINESSES BEFORE, DURING, AND AFTER AN ENVIRONMENTAL JOLT
by G. Tyge Payne, Curt Moore, Jennifer Sexton
Abstract: Entrepreneurial orientation (EO) has become a construct of considerable interest in the family business literature. Despite such attention, scholars have yet to examine if and how EO in family businesses changes over time. This study explores this gap by investigating both continuous and discontinuous change in EO in a sample of S&P 500 family businesses between 2001 and 2012. We find that EO changes before, during, and after an environmental jolt, which is defined as a major unforeseen and discontinuous environmental change. More specifically, we find that EO gradually increases at a linear rate prior to the occurrence of a jolt, discontinuously decreases during the initial stage of the jolt, then resumes a gradual linear growth trend following this period. We further explore the relationship between time and EO by examining change in EO across different industries, finding significant changes between family firms in different industries.
Keywords: Family Business; Entrepreneurial Orientation; Temporality; Time; Crisis; Discontinuous Change
Internationalization of Publicly Traded Family Firms: A Transaction Cost Theory Perspective and Longitudinal Analysis
by Esra Memili, Kaustav Misra, James Chrisman, Dianne Welsh
Abstract: There has been a prominent stream of research investigating internationalization of organizations. While the importance of transaction costs in the governance decisions of firms has been well established in the literature, transaction cost theory (TCT) in family firms remains under utilized. We examine the impact of family governance (i.e., family ownership and familys involvement in management and board) on internationalization within the domain of TCT on 386 of S&P 500 firms. Our findings indicate an inverted U-shaped relationship between family ownership and internationalization and a u-shaped relationship between familys involvement in management and board and internationalization. This illustrates the interesting differential impact of family involvement components on internationalization. We conclude by discussing future research and implications for practice.
Keywords: Transaction Cost Theory; Internationalization; Family Firms; Family Ownership; Family Management